According to the World Health Organization, an estimated 30 percent of the world’s population lacks regular access to medicines, with this figure rising to over 50 percent in the poorest parts of Asia and Africa. Governments have often blamed this on the price of medicines, and have responded with a number of market interventions such as price controls and compulsory licenses.
However, our new research released this week shows that governments themselves are major contributors to the final retail price of medicines, through import tariffs and a range of domestic taxes. While such tariffs are gradually declining around the world, they are still as high as 15% – thereby acting as a tax on sick people.
Other low-income countries such as Ghana and Bangladesh increase the cost of medicines with import duties of between 6% and 8% - self-defeating in countries with such high disease burdens. Some countries levy especially punitive tariffs on antibiotics, hampering the fight against infectious disease. The worst offenders are Nigeria (20%), Burundi (15%), Nepal (15%) and Congo (15%).
In contrast, countries like Rwanda, Kenya, Gabon and Saudi Arabia have recently abolished import duties on medicines, joining the likes of wealthy European Union countries, Canada and the USA, as well as poorer countries like Benin, Malawi, and South Africa. Indian tariffs have fallen from 35% to 10% since 2001.
In 2005, a coalition of Switzerland, Singapore and the USA proposed at the World Trade Organization that all countries should abolish tariffs on medicines, as they are a regressive tax on the sick. It’s encouraging that many countries are moving in that direction, but there are still too many governments who needlessly price their own citizens out of treatment.
A global interactive map of medicine tariffs is available here.
Philip Stevens is Senior Fellow at International Policy Network, a London-based think tank